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Lmt Mercer Group, Inc v. Maine Ornamental

May 24, 2011

LMT MERCER GROUP, INC.,
PLAINTIFF,
v.
MAINE ORNAMENTAL, LLC, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Arpert, U.S.M.J

NOT FOR PUBLICATION

MEMORANDUM OPINION AND ORDER

I. INTRODUCTION

This matter having come before the Court on a Motion by Defendants Maine Ornamental, LLC, Universal Consumer Products, Inc., and Universal Forest Products, Inc. (collectively, "Defendants") for "a stay of this matter pending completion of the U.S. Patent and Trademark Office's reexamination of the patent in suit" [dkt. entry. no. 32], returnable June 6, 2011. Plaintiff LMT Mercer Group, Inc. ("Plaintiff") filed opposition on April 18, 2011. Defendants filed a reply brief on April 25, 2011. For the reasons stated herein, Defendants' Motion is granted.

II. FACTUAL BACKGROUND AND PROCEDURAL HISTORY

On September 9, 2010, Plaintiff filed a Complaint against Defendants ("Maine Action") alleging infringement of U.S. Patent No. 6,722,637 ("'637 patent") entitled "Fence Post Accessory Apparatus". See Pl.'s Comp., dkt. entry no. 1 at 1. Thereafter, Plaintiff filed two (2) separate actions in the United States District Court for the District of New Jersey alleging infringement of the '637 patent against different defendants. Those matters are captioned LMT Mercer Group, Inc. v. Home Tops, LLC, Civ. Action No. 10-6699 (D.N.J. 2010) ("Home Tops Action") and LMT Mercer Group, Inc. v. McFarland Cascade Holdings, Inc., et al., Civ. Action No. 11-0539 (D.N.J. 2011) ("McFarland Action"). Presently, all three (3) actions are assigned to District Judge Freda L. Wolfson and Magistrate Judge Douglas E. Arpert.

On February 1, 2011, Defendants filed a request for ex parte reexamination of the '637 patent with the United States Patent & Trademark Office ("USPTO"). See Def.'s Br., dkt. entry no. 21-1 at 1-2. The Court notes that Defendants' made this request based, in part, on a "continuation application" filed by Stallion Fence Accessories -- Plaintiff's predecessor in interest -- which was rejected by the USPTO with respect to "claims very similar to the claims issued in the '637 patent on the basis of" additional prior art. See Def.'s Br., dkt. entry no. 21-1 at 1-2; see also Def.'s Decl. of Melanie Miller ("Miller"), dkt. entry no. 22, Exhs. 1-4. On February 14, 2011, Defendants filed a motion to stay this matter pending the outcome of their request for ex parte reexamination. See dkt. entry no. 21. The Court notes that on February 9, 2011, the USPTO "issued a Notice of Failure to Comply with Ex Parte Reexamination Request Filing Requirements under 37 C.F.R. § 1.510 and required Defendants to modify" their request within thirty (30) days. See Def.'s Br., dkt. entry no. 32-1 at 1. On February 17, 2011, Defendants' motion to stay was denied without prejudice. See dkt. entry no. 24.

On March 9, 2011, Defendants filed a second request for ex parte reexamination of the '637 patent with the USPTO. See Def.'s Br., dkt. entry no. 32-1 at 2. On March 29, 2011, the USPTO granted Defendants' request for ex parte reexamination. See Def.'s Decl. of Miller, dkt. entry no. 32-2, Ex. 6. Specifically, the USPTO concluded that "each of the references cited by the [Defendants] raises a substantial new question of patentability with respect to the subject patent" and, "[a]ccordingly, claims 1-23 of the subject patent will be reexamined". Id., Ex. 6 at 8.

On April 4, 2011, Defendants renewed their Motion to stay this matter pending the USPTO's ex parte reexamination of the '637 patent. The Court notes that a similar motion to stay proceedings was filed in the McFarland Action on April 21, 2011. See LMT Mercer Group, Inc. v. McFarland Cascade Holdings, Inc., et al., Civ. Action No. 11-0539 (D.N.J. 2011), dkt. entry no. 10. The Court also notes that a similar motion to stay proceedings was filed in the Home Tops Action on May 13, 2011. See LMT Mercer Group, Inc. v. Home Tops, LLC, Civ. Action No. 10-6699 (D.N.J. 2010), dkt. entry no. 18.

A. Defendants' Arguments in Support of the Motion to Stay

Initially, citing Brass Smith, LLC v. RPI Indus., 2010 U.S. Dist. LEXIS 116063, at *19-20 (D.N.J. 2010), ICI Uniqema, Inc. v. Kobo Prods., Inc., 2009 U.S. Dist. LEXIS 108421, at *2-3 (D.N.J. 2009), Stryker Trauma S.A. v. Synthes, 2008 U.S. Dist. LEXIS 23955 (D.N.J. 2008), Eberle v. Harris, 2005 U.S. Dist. LEXIS 31885 (D.N.J. 2005), Sabert Corp. v. Waddington N. Am., Inc., 2007 U.S. Dist. LEXIS 68092 (D.N.J. 2007), Cima Labs, Inc. v. Actavis Group HF, 2007 U.S. Dist. LEXIS 41516, at *30-31 (D.N.J. 2007), Motson v. Franklin Covey Co., 2005 U.S. Dist. LEXIS 34067 (D.N.J. 2005), GPAC, Inc. v. D.W.W. Enterprises, Inc., 144 F.R.D. 60, 64 (D.N.J. 1992), and Sorensen v. Black and Decker Corp., 2007 WL 2696590, at *4 (S.D. Cal. 2007), Defendants maintain that "[a]lthough every case is fact specific, almost every reported New Jersey District Court opinion that has considered the issue has granted a stay where a reexamination request was pending". See Def.'s Reply Br. at 6-7. Further, Defendants contend that "[s]tays are particularly appropriate when the reexamination result might assist the court in making a validity determination or would eliminate the need to make an infringement determination" and "are typically only denied in New Jersey because of the late stage of a proceeding", as "a delay [in proceedings] itself is an insufficient basis upon which to deny a stay". Id. at 7.

1. A stay will not unduly prejudice Plaintiff.

Defendants argue that "there is no undue prejudice to Plaintiff in the grant of a stay". Id. Citing Stryker, 2008 U.S. Dist. LEXIS 23955, at *6 and Cima Labs, 2007 U.S. Dist. LEXIS 41516, at *30 and noting that "discovery is in its beginning stage", Defendants contend that "a mere claim of delay is an insufficient basis upon which to deny a stay" because "delay is common to all cases that are stayed" and maintain that "any delay would not be for such a protracted or indefinite period to constitute undue prejudice" and would "simplify the issues because it may result in the cancellation, clarification, or limitation of the claims". Id. at 7-8. Defendants also state that "given the expertise of the Patent Office, its findings would provide a valuable analysis to the Court". Id. at 8. Defendants argue that "Plaintiff could have received any rejections to its patent claims very soon" but "applied the brakes to the reexamination proceeding by refusing to waive a Patent Owner's Statement", thereby preventing the USPTO from acting on reexamination "until the May 29 Patent Owner Statement deadline expires". Id.

With respect to the Board of Patent Appeals and Interferences ("BPAI"), citing the MANUAL OF PATENT EXAMINING PROCEDURE § 2273 (2008), Defendants maintain that

"Plaintiff's position...is a blatant red herring" because "as a third party requester in this ex parte process, Defendants may not appeal the reexamination decision...[and] may not participate in any appeal by Plaintiff to the BPAI". Id. Similarly, with respect to the Court of Appeals for the Federal Circuit, citing 35 U.S.C. § 306, the MANUAL OF PATENT EXAMINING PROCEDURE § 2273 (2008), and Greenwood v. Seiko Instruments, 8 USPQ 2d 1455 (D.D.C. 1988), Defendants maintain that "Plaintiff's position...is...totally inaccurate" because "in an ex parte proceeding, only the patent owner may seek court review under the Patent Act...and only under certain circumstances" and "the reexamination statute does not provide any review of a patentability decision that favors the patent owner". Id. Thus, Defendants argue that they "have no ability to affect the post-reexamination decision such that it could work a delay in this action" and that "any delay caused by any appeal...would be solely of Plaintiff's own making". Id. at 8-9.

Finally with respect to Plaintiff's claims of irreparable injury and tactical disadvantage, Plaintiff argues that same are "disingenuous at best". Id. at 9. Defendants maintain that "Plaintiff and/or its predecessor have known about Defendants' sale of the accused products for six years" and "could have filed this action anytime within the last six years", "could have filed a motion for preliminary injunction if any claimed harm was truly irreparable", and/or "could have avoided a delay in the reexamination proceedings by waiving the Patent Owner's Statement process" but chose not to do any of those things. Id. Thus, Defendants argue, Plaintiff's claims of prejudice based on any delay occasioned by the reexamination process is "mere posturing". Id.

2. A stay will simplify the issues for trial and conserve judicial resources.

Defendants argue that Plaintiff's protestations that "a stay will not conserve judicial resources flies in the face of this Court's well-seasoned jurisprudence". Id. at 10. Citing Eberle v. Harris, 2005 WL 6192865, at *2 (D.N.J. 2005), GPAC, 144 F.R.D. 60, 64, and ICI Uniqema, 2009 U.S. Dist. LEXIS 108421, at *3, Defendants maintain that "the New Jersey District Courts have long enumerated the many advantages of staying litigation pending patent reexamination, including: (1) a review of all prior art presented to a court by the Patent Office with its particular expertise; (2) the potential alleviation of numerous discovery problems relating to prior art by Patent Office examination; (3) the potential dismissal of a civil action should invalidity of a patent be found by the Patent Office; (4) encouragement to settle based upon the outcome of the Patent Office; (5) an admissible record at trial from the Patent Office proceedings which would reduce the complexity and length of the litigation; (6) a reduction of issues, defenses and evidence during pre-trial conferences; and (7) a reduction of costs for the parties and a court". Id. at 9-10.

With respect to Plaintiff's claim that "reexamination is unlikely to lead to the cancellation or modification of any claims", Defendants point out that "in 75% of all reexaminations claims are at least changed". Id. at 10. Defendants argue, therefore, that it is "highly probable...that Plaintiff's patent claims will either be modified or invalidated during...reexamination". Id. Thus, Defendants maintain that if the Court denies their Motion, "the parties will be forced to litigate through Markman-related deadlines while the disputed claims are simultaneously reexamined by the Patent Office". Id. at 10-11. Defendants contend that ...


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